US for Bros. Builders Sup. v. Old World Artisans

• Decision Date: 30 September 1988
• Docket Number: Civ. A. No. 4:87-cv-2-HLM.
• Citation: 702 F. Supp. 1561
• Parties: UNITED STATES of America for the Use of BROTHERS BUILDERS SUPPLY COMPANY, Plaintiff, v. OLD WORLD ARTISANS, INC.; Ticor Construction Co., Inc.; and the Central National Insurance Company of Omaha, Defendants.
• Court: U.S. District Court — Northern District of Georgia

702 F. Supp. 1561

UNITED STATES of America for the Use of BROTHERS BUILDERS SUPPLY COMPANY, Plaintiff, v. OLD WORLD ARTISANS, INC.; Ticor Construction Co., Inc.; and the Central National Insurance Company of Omaha, Defendants.

Civ. A. No. 4:87-cv-2-HLM.

United States District Court, N.D. Georgia, Rome Division.

September 30, 1988.

COPYRIGHT MATERIAL OMITTED

E. Carl Prince, Jr., Office of E. Carl Prince, Jr., Carrollton, Ga., for U.S. of America for the Use of Brothers Builders Supply Co.

Jack Freddie Witcher, Office of Jack Freddie Witcher, Bremen, Ga., for Old World Artisians, Inc.

Gary W. Bross, Philip Lee Westee, Office of Gary W. Bross, Decatur, Ga., for Ticor Const. Co., Inc.

Glen W. Clark, Jr., Palmer Howard Nowak & Clark, Lithia Springs, Ga., for Cent. Nat. Ins. Co. of Omaha.

ORDER

HAROLD L. MURPHY, District Judge.

This case is before the Court on various motions for summary judgment filed by the plaintiff and the defendants. The motions shall be considered seriatim.

This action was brought by Plaintiff Brothers Builders Supply Company (Builders Supply) to recover on a construction payment bond issued by Central National Insurance Company of Omaha (Central National), pursuant to the Miller Act, 40 U.S. C. § 270a, et seq. The bond was issued with Defendant Ticor Construction Company, Inc., (Ticor), a general contractor, listed as principal, and Central National as surety. Ticor had contracted to construct camper warehouses on a federal government job at Lake Allatoona, Georgia. Builders Supply supplied materials and equipment to Defendant Old World Artisans, Inc. (Old World), who worked as a subcontractor for Ticor.

The Stipulated Facts

In the Pretrial Order, the parties stipulated to the following facts:

In 1985, Defendant Ticor entered into a construction contract with the United States Army Corps of Engineers. In connection with this contract, Central National issued a payment bond in the amount of $147,500.10, pursuant to 40 U.S.C. § 270b, the Miller Act.

On September 5, 1985, Ticor entered into a subcontract with Defendant Old World for the performance of carpentry work in furtherance of the bonded general contract. At various times afterwards, Old World ordered construction materials and supplies from Builders Supply for use on the project. These materials and supplies were delivered to the job site and used on the project.

On November 11, 1985, officers of Ticor and Builders Supply discussed the account of Old World by telephone. Builders Supply advised Ticor of the outstanding amounts that Old World owed Builders Supply for materials and supplies. Builders Supply further advised Ticor that additional shipments would not be made to Old World for use on the project without payment. Ticor agreed to pay for the current shipment and paid Builders Supply $3,500.00. Ticor also agreed to make all further disbursements to Old World jointly to Builders Supply and to Old World. Builders Supply then resumed providing material and supplies to Old World.

On November 21, 1985, Ticor made written notification of its intention to make future payments to Old World jointly to Builders Supply and Old World. Additional materials and supplies then were delivered by Builders Supply to Old World. No additional payments were made either by Ticor or Old World to Builders Supply, or by Ticor to Old World.¹

The last item of materials and supplies ordered from and provided by Builders Supply to Old World was a tape measure, which was ordered and delivered to Old World for use on the job on January 9, 1986. Prior to that delivery, Old World ordered a shipment of red-wood timber which on January 7, 1986, was delivered to Old World's place of business. On January 8, 1986, the timber was delivered by Old World to the job site. Old World last performed work on the project on January 9, 1986.

Builders Supply attempted to contact Ticor concerning the account of Old World at various times after November 21, 1985, and prior to April 8, 1986, but Ticor's telephone had been disconnected and Builders Supply was unable to contact Ticor.

On April 8, 1986, a written notice of the claim of Builders Supply in the principal amount of $11,668.95, together with interest thereon in the amount of one and one-half percent per month was mailed to Ticor at the address set forth on the bond. The notice was returned by the Postal Service marked "moved, not forwardable."

On January 5, 1987, Builders Supply filed this suit against Central National, Ticor, and Old World. Old World filed a cross-claims against Ticor and Central National on August 12, 1987.

The account between Old World and Builders Supply for materials and services used for the project aggregated to $11,668.95, principal and $2,076.45, interest as of February 1, 1987. There is no claim or issue involving an award of attorneys' fees.

The Motion for Summary Judgment of Central National Against Builders Supply and Those of Builders Supply Against Central National, Ticor, and Old World

The central issue involved in the motion for summary judgment of Central National against Builders Supply and that of Builders Supply against Central National, Ticor, and Old World is whether Builders Supply gave proper and timely notice of its claim against Ticor in accordance with the requirements of the Miller Act, 40 U.S. C. § 270b. The Act provides as follows:

Every person having direct contractual relationship with a subcontractor but no contractual relationship express or implied with the contractor furnishing said payment bond shall have a right of action upon the said payment bond upon giving written notice to said contractor within ninety days from the date on which such person ... furnished or supplied the last of the material for which such claim is made, stating with substantial accuracy the amount claimed and the name of the party to whom the material was furnished or supplied.... Such notice shall be served by mailing the same by registered mail, postage prepaid, in an envelope addressed to the contractor at any place he maintains an office or conducts his business ... or in any manner in which the United States Marshal of the district in which the public improvement is situated is authorized by law to serve summons.

40 U.S.C. § 270b. Failure to comply with the ninety day notice requirement will bar a claim on the payment bond. United States, Etc., v. Fidelity and Guaranty Co., 656 F.2d 993, 995 (5th Cir. Unit B Sept. 1981).

In the instant case, Builders Supply was required to give notice of its claim to Ticor within ninety days of the date it last delivered or furnished material for the job. April 8, 1986, the day that Builders Supply gave formal written notice to Ticor was exactly ninety days after January 9, the date when the last item from Builders Supply, the tape measure, was furnished. If this tape measure constitutes "material" under the Miller Act, then notice was timely. If not, then the last "material" supplied was the red-wood timber, delivered to Old World more than ninety days prior to formal notice.

If the formal notice given was not timely, then the question is whether informal notice given prior to April 8 was sufficient to satisfy the requirements of the Act. Alternatively, notice might have been timely if the effective date of the delivery of the red-wood timber was when Old World delivered it to the job site on January 8, 1986, rather than when Builders Supply delivered it to Old World on January 7, 1986.

The Tape Measure

This case turns upon the narrow legal question of whether the tape measure supplied was "material" as opposed to "capital equipment" under the Miller Act. The Act obligates the surety for the payment of persons furnishing "labor and material in the prosecution of the work provided for in the contract." 40 U.S.C. § 270a(a)(2). The general concept behind this distinction is that the purpose of the Miller Act is to provide protection for suppliers who supply material for government jobs. The supplier can look to the Miller Act payment bond for material supplied to a subcontractor and used in a government job. The Act does not provide protection for capital equipment that the subcontractor purchases and can use for subsequent non-government jobs.

The courts have refrained from an all-inclusive definition of "material furnished in the prosecution of the work." See United States for Use of Byrne & Co. v. Fire Ass'n. of Philadelphia, 260 F.2d 541, 544 (2d Cir.1958), citing Massachusetts Bonding & Insurance C. v. United States, 88 F.2d 388 (5th Cir.1937). The inquiry begins with the principle that "the Miller Act is remedial and must be construed to effect Congress's purpose to protect those whose labor and materials go into public projects." Clifford F. MacEvoy Co. v. United States ex rel. Calvin Tomkins Co., 322 U.S. 102, 107, 64 S.Ct. 890, 893, 88 L.Ed. 1163 (1944). While material provided for the work is recoverable, "the cost of tools may not be claimed under the Miller Act" because they are equipment which the subcontractor may continue to use and are not consumed in the public project. Ibex Industries, Inc. v. Coast Line Waterproofing, 563 F.Supp. 1142, 1146 (D.D.C.1983). The Ibex court held that hoses, axes, hammers, goggles, brushes, and mop handles, among other things, were tools and not material for the purpose of the Act. Similarly, the Fourth Circuit has held that reusable dredging pipe was not material under the Act. United States for the Use of Sunbelt Pipe v. United States Fidelity, 785 F.2d 468 (4th Cir.1986). The Court reasoned that

A thing which may reasonably be expected to be removed by the contractor and used in subsequent jobs is a part of the contractor's capital equipment, but something which is reasonably expected to have no utility or economic value to the contractor after the completion of the work may be classified as material.

Id. at 470.

Thus, the classifying principle that the Court must use in the...